Nothing is simple in complex systems: macroprudent regulation?
Yes, policy framework regulation/coordination was the problem in CEE. For example, we know quite a lot about international capital flows, how to start liberalizing them, etc, going back to McKinnon's book "The Order of Financial Liberalization" published back in 1971. But there is still a lot of controversies even on FDI type of flows, let alone "hot capital" movements (Tobin tax controversies, etc) and especially in some CEE that adopted currency boards as opposed to classical central banks, e.g. the Baltics. Even though it was indeed good to have strong Scandinavian banks invested in the Baltic banking (innovation, customer care, etc), what was missing under the Baltic currency board regimes was, for example, the proper credit channel governance in host countries. Maybe this was not a problem per se because theoretically an abandonment of active monetary policies (e.g. short-term interest rate formation, etc)in favor of the currency board automatism should have, logically, freed time and resources for host country bank macroprudential oversight. However, my perception is that this type of oversight was not there simply because almost everybody so believed in those foreign banks (hey, a version of Mr Greenspan's: banks will act in their own long-term interest) to do the right things for the host countries in the environment of almost total passivity of central banks-currency boards. Some macroprudential activism by policymakers was missing here, wasn't it?
review
Eastern Europe is not coming out of the the crisis .... what is this guy talking about??? Who is coming out of the crisis ? Latvia , Bulgaria , Romania ,? This is some kind of a joke . After being demolished by the West and the neoliberalism free-market nonsense the led to the biggest bubble in history how do you think they'll be out of the crisis after the West dismantled their industry and agriculture ? How do you think exactly that happens ? This guy is talking nonsense
After experienced the biggest bubble the governments in some of the countries made matters even worse by cutting spending andimposing austerity in times of crisis .... stop talking such things . it's funny . Europe is going down the drain espaccialy the South-Eastern part..........
I think one of the dangers of
I think one of the dangers of what happened in Eastern Europe (if this region is a good analytical term) is that the crisis may have taken out some of the more speculative investments in the region. My problem is if these problems are endemic to the region. If things go back to business as usual as it unfortunately probably the case it is likely to go back to the old problems.
The first priority is cleaning up property ownership to make productive export based economies more worthwhile than asset inflation and stripping. In some regions (Poland) this is fairly advanced while in others (Russia) it is not. This is however, not just a "East European" problem but also one around the world as financialization has made property very fluid.
The second problem is I think the need for some in the region to diversify away from natural resources (if we include Eurasia). Export related jobs add value and create economies of scale. However, this is again not really exclusively an Eastern European or Eurasian problem. Jobs need to create prosperous employees.
My impression is that the region being addressed in the interview has exaggerated many trends that still haunt the world economy altogether.
